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Looking to use finca ruin as tree plantation investment - Good or Bad?

Looking to use finca ruin as tree plantation investment - Good or Bad?

Old Feb 21st 2021, 3:48 pm
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Default Looking to use finca ruin as tree plantation investment - Good or Bad?

Hi All nice people,

I live in UK and looking at some of the low cost finca ruin lands advertised online in Spain (here we go again...I know...but its different this time

I have been planning to implement a permaculture farming project for which I have been searching for suitable land outside UK (10+ acres). This project does not require high water requirement but more important is good sunny weather (not below freezing all year round). I think some of the area in south of Spain with about an hour travel to the coast seems suitable and low cost. The key thing is I will not be living there and only be visiting once or twice a year (for the curious ones...yes I can water it remotely (thanks to technology) and will stay in a hotel /camper or close by.

Okay, so what is the issue... well, I am trying to find an answer to the below questions and looking to see if anyone has the answers or looking to do something similar.

1. Is there a difference to general income tax versus farming income tax in Spain i.e. treated differently?
2. Are there any prohibition on certain plantation or export e.g. high value timber like teak or similar (nothing illegal) or any pointers to which department can help?
3. If I buy a low cost finca ruin land, do I need any special permission to start my project i.e. should the land be designated as certain type ?
4. If I buy an empty land with a ruin then is there an annual tax for it that I have to pay like for the residential properties with deemed rental income?
5. How do I legally go about measuring the farm property and knowing the correct boundaries is there any online service or should only go to local department ?

Thanks in advance.
Cheers

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Old Feb 21st 2021, 8:39 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

I live in the sort of area you are looking for.

Interesting questions. First comment is water is in short supply in Southern Spain. Desertification is a feature.This hasnt stopped a gold rush on trees le Mangoes. In our area olives dominate. Go East and almonds are about all you can grow ( without irrigation) go West and you end up in the wettest place in Spain around Grazalema.
1. There are generous allowances against tax for investment in new equipment.
2.I would have thought the British Embassy should be able to point you in the right direction possibly the Spanish Embassy? A search of permaculture Andalucia throws up some interesting results.
3. I guess not if it is agricultural land. See 5
4 Yes but agricultural land is rated cheaply. Handful of euros but with a habitable house say 350 euros. You will be unlikely to get permission to erect any permanent structure.
5. sigPac is a website which shows the demarcation of parcels of land and also how they are classed . I cant post a link to it at the moment.

one final point is better quality land fetches a better price predictably.

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Old Feb 21st 2021, 9:23 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by olivefarmer View Post
I live in the sort of area you are looking for.

Interesting questions. First comment is water is in short supply in Southern Spain. Desertification is a feature. This hasnt stopped a gold rush on trees le Mangoes. In our area olives dominate. Go East and almonds are about all you can grow ( without irrigation) go West and you end up in the wettest place in Spain around Grazalema.
1. There are generous allowances against tax for investment in new equipment.
2.I would have thought the British Embassy should be able to point you in the right direction possibly the Spanish Embassy? A search of permaculture Andalucia throws up some interesting results.
3. I guess not if it is agricultural land. See 5
4 Yes but agricultural land is rated cheaply. Handful of euros but with a habitable house say 350 euros. You will be unlikely to get permission to erect any permanent structure.
5. sigPac is a website which shows the demarcation of parcels of land and also how they are classed . I cant post a link to it at the moment.

one final point is better quality land fetches a better price predictably.
Appreciate your patience and response to my questions.
You have provided some useful information such as the olives and mangoes it will give me an idea of the water they might have and soil PH approximately.
I do have some follow up questions if you don't mind please.
On 4, how do you find out the rateable value of the land is there a govt. website or should I check what they have paid so far with evidence? I guess an independent source like govt website would be better imo
On 5, Thanks I will check this SigPac if I could google and find it

Just to add a bit more details on my project, the trees I want to plant don't like too much water and they thrive is even rocky soil.

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Old Feb 21st 2021, 9:27 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

As olivefarmer mentioned, you can also be in the wettest place, so don't be fooled by thinking further South is automatically sunnier, drier, or not below freezing. No idea what you plan to grow, but parts of Tarragona can also offer ideal growing conditions as an example.

https://www.oecd-ilibrary.org//sites/641fe862-en/index.html?itemId=/content/component/641fe862-en#section-d1e34471

Last edited by Moses2013; Feb 21st 2021 at 9:35 pm.
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Old Feb 22nd 2021, 7:53 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by vpjunction View Post
Hi All nice people,

I live in UK and looking at some of the low cost finca ruin lands advertised online in Spain (here we go again...I know...but its different this time

I have been planning to implement a permaculture farming project for which I have been searching for suitable land outside UK (10+ acres). This project does not require high water requirement but more important is good sunny weather (not below freezing all year round). I think some of the area in south of Spain with about an hour travel to the coast seems suitable and low cost. The key thing is I will not be living there and only be visiting once or twice a year (for the curious ones...yes I can water it remotely (thanks to technology) and will stay in a hotel /camper or close by.

Okay, so what is the issue... well, I am trying to find an answer to the below questions and looking to see if anyone has the answers or looking to do something similar.

1. Is there a difference to general income tax versus farming income tax in Spain i.e. treated differently?
2. Are there any prohibition on certain plantation or export e.g. high value timber like teak or similar (nothing illegal) or any pointers to which department can help?
3. If I buy a low cost finca ruin land, do I need any special permission to start my project i.e. should the land be designated as certain type ?
4. If I buy an empty land with a ruin then is there an annual tax for it that I have to pay like for the residential properties with deemed rental income?
5. How do I legally go about measuring the farm property and knowing the correct boundaries is there any online service or should only go to local department ?

Thanks in advance.
Cheers
I assume you can legally reside in Spain? , if not thats the first major and probably the biggest hurdle to get over.

If the above is sorted its well worth looking into what grants are available ,think single farm payments , I think you need a minimum acreage , 12 acres IIRC , hopefully you dont expect to make any more than a very basic wage from this .

You need to speak to an agricultural gestor, also here`s a lead http://www.coag.org edit heres the Min of Ag website https://www.mapa.gob.es/en/

Last edited by Rotor; Feb 22nd 2021 at 8:01 pm.
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Old Feb 22nd 2021, 9:28 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by Moses2013 View Post
As olivefarmer mentioned, you can also be in the wettest place, so don't be fooled by thinking further South is automatically sunnier, drier, or not below freezing. No idea what you plan to grow, but parts of Tarragona can also offer ideal growing conditions as an example.
Point taken. I will research and double check before buying the land. Thanks for your inputs, appreciate it.
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Old Feb 22nd 2021, 9:32 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by Rotor View Post
I assume you can legally reside in Spain? , if not thats the first major and probably the biggest hurdle to get over.

If the above is sorted its well worth looking into what grants are available ,think single farm payments , I think you need a minimum acreage , 12 acres IIRC , hopefully you dont expect to make any more than a very basic wage from this .

You need to speak to an agricultural gestor, also here`s a lead edit heres the Min of Ag website
I do not have legal rights to reside in Spain but travel there. I do not intend to reside there other than short travels during the year. If only a resident will get grants that is fine, I am not looking for grants but if there is anything for farming in terms of tax allowance etc. Not sure if the normal residents grants or allowances will be applicable to a agricultural company but owned by foreigner residing in UK hmm.

I will check the website you have provided. Much appreciate the inputs on this.
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Old Feb 23rd 2021, 7:40 am
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by vpjunction View Post
Point taken. I will research and double check before buying the land. Thanks for your inputs, appreciate it.
Here is also another official link https://www.agenciatributaria.es/AEA..._y_pesca.shtml
REAGP is open to farmers with incomes from agricultural activities below EUR 250 000 (and total purchases of less than EUR 150 000). Under the REAGP producers can charge a flat rate of 12% on agricultural and forestry products and 10.5% on livestock and fishery products sold to VAT registered customers. These flat rate amounts allow farmers to be compensated for the VAT tax paid on inputs they have purchased for the running of their farming business.
There is no obligation to charge, settle and pay VAT for sales of natural products obtained in exploitations, nor for the supply of investment goods used in this activity other than buildings.The import of goods, intra-community goods acquisitions and transactions subject to reversed payment liability are all exempt.

Recoverable or paid VAT charges on acquisitions of goods or services employed in the activity are not deducted.

In this regime, a compensation is received as a lump sum on deliveries of natural products for other businesses not attached to the agricultural regime, which do not exclusively perform exempt transactions internally.This is also the case for intra-community supplies to corporate persons that are not businesses, and service provisions included in the special regime for agriculture, livestock farming and fishing.This compensation will be the resulting amount from applying 12% to the sales price of products obtained from agricultural or forestry exploitations, and in services related thereto.The compensation will be 10.5% in the supply of products obtained from livestock farming or fishing exploitations, and in the provision of accessory services.

Last edited by Moses2013; Feb 23rd 2021 at 7:43 am.
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Old Feb 23rd 2021, 6:54 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Following this thread with some interest since we are sort of investigating doing a similar thing in a few years, also with the added fun of being UK nationals...

I would be quite surprised if you could take an income as a non resident unless you are considering doing this in a cash in hand or other non official way. Appreciate it is only a ruined finca but according to the land type surely farming is classed as a business operation so if you set this up under a company structure registered in Spain or even as an autonomo would that not be a way to progress the idea and do it all in a relatively straightforward way?
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Old Feb 23rd 2021, 8:04 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by Moses2013 View Post
Here is also another official link <link removed but in previous post due to restriction as new joiner )
REAGP is open to farmers with incomes from agricultural activities below EUR 250 000 (and total purchases of less than EUR 150 000). Under the REAGP producers can charge a flat rate of 12% on agricultural and forestry products and 10.5% on livestock and fishery products sold to VAT registered customers. These flat rate amounts allow farmers to be compensated for the VAT tax paid on inputs they have purchased for the running of their farming business.
There is no obligation to charge, settle and pay VAT for sales of natural products obtained in exploitations, nor for the supply of investment goods used in this activity other than buildings.The import of goods, intra-community goods acquisitions and transactions subject to reversed payment liability are all exempt.

Recoverable or paid VAT charges on acquisitions of goods or services employed in the activity are not deducted.

In this regime, a compensation is received as a lump sum on deliveries of natural products for other businesses not attached to the agricultural regime, which do not exclusively perform exempt transactions internally.This is also the case for intra-community supplies to corporate persons that are not businesses, and service provisions included in the special regime for agriculture, livestock farming and fishing.This compensation will be the resulting amount from applying 12% to the sales price of products obtained from agricultural or forestry exploitations, and in services related thereto.The compensation will be 10.5% in the supply of products obtained from livestock farming or fishing exploitations, and in the provision of accessory services.
Thanks for information. I will go through this fully to understand the cost implications and ways to manage it.
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Old Feb 23rd 2021, 8:14 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by nb888 View Post
Following this thread with some interest since we are sort of investigating doing a similar thing in a few years, also with the added fun of being UK nationals...

I would be quite surprised if you could take an income as a non resident unless you are considering doing this in a cash in hand or other non official way. Appreciate it is only a ruined finca but according to the land type surely farming is classed as a business operation so if you set this up under a company structure registered in Spain or even as an autonomo would that not be a way to progress the idea and do it all in a relatively straightforward way?
Welcome

I am not sure why you say that I can't take an income as a non-resident. If a non-resident person is allowed to purchase a finca property then how is that the government is going to prevent from generating an income? I would appreciate if you could provide any relevant information.

I am not going to do any cash in hand deal or unofficial way, I will only do it if it is legitimate and legal. However, I will use all the tools and techniques to optimize profits.

For instance, my project has short term plants and long term timber to cultivate. I don't even know what the rules will be after a decade but as farming will still be there as a fellow farmer/investor I believe I can sell the produce normally. I do have the idea of an investment vehicle such as a company for instance, I can have a french company that can buy the produce from the Spain farmer (at lower cost) to sell locally in France at higher profit etc.. This if works will guarantee my retirement funds for rest of the life in 10 years, I don't have to sell the timber in the same year so I can balance it to optimize to be within certain income tax threshold
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Old Feb 24th 2021, 3:58 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by vpjunction View Post
Welcome

I am not sure why you say that I can't take an income as a non-resident. If a non-resident person is allowed to purchase a finca property then how is that the government is going to prevent from generating an income? I would appreciate if you could provide any relevant information.

I am not going to do any cash in hand deal or unofficial way, I will only do it if it is legitimate and legal. However, I will use all the tools and techniques to optimize profits.

For instance, my project has short term plants and long term timber to cultivate. I don't even know what the rules will be after a decade but as farming will still be there as a fellow farmer/investor I believe I can sell the produce normally. I do have the idea of an investment vehicle such as a company for instance, I can have a french company that can buy the produce from the Spain farmer (at lower cost) to sell locally in France at higher profit etc.. This if works will guarantee my retirement funds for rest of the life in 10 years, I don't have to sell the timber in the same year so I can balance it to optimize to be within certain income tax threshold
There are often quota`s on agricultural produce in all EU countries and the UK and in many cases you have to have a quota to be able to grow a crop, there is also some restrictions on moving produce between EU countries.
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Old Feb 24th 2021, 7:57 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by Rotor View Post
There are often quota`s on agricultural produce in all EU countries and the UK and in many cases you have to have a quota to be able to grow a crop, there is also some restrictions on moving produce between EU countries.
Interesting..hmm but I am going to have long term (10+ years) forestry tree plantation and some short term crops. I will try to find how they set these quotas on type of crops. Most of my plantation is going to be timber so not sure how they will set quota on that ?
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Old Feb 24th 2021, 8:19 pm
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Default Re: Looking to use finca ruin as tree plantation investment - Good or Bad?

Originally Posted by vpjunction View Post
Interesting..hmm but I am going to have long term (10+ years) forestry tree plantation and some short term crops. I will try to find how they set these quotas on type of crops. Most of my plantation is going to be timber so not sure how they will set quota on that ?
I dont know either , you need know exactly what you can and cant plant before you part with any money, professional advice is often cheap however expensive it first appears.
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